Which of the following is most likely to be classified as a merit good?
Correct answer: C. Basic education
- A. National defence
- B. Street lighting
- C. Basic education
- D. Private jewellery
Explanation
Basic education is a merit good because society may encourage its consumption due to positive social benefits, even if individuals do not fully consider them. National defence and street lighting are closer to public goods because they are broadly non-excludable and non-rival.
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About Public Finance
Government revenue and expenditure are analysed through taxation, public borrowing, budgets, subsidies, transfers and public debt. The topic explains how fiscal policy affects resource allocation, income distribution, economic stability and growth, while distinguishing direct from indirect taxes, progressive from regressive taxation, and public goods from goods supplied by private markets.
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